HSBC and Tradeshift Target B2B Embedded Lending Opportunity With New Venture

HSBC has launched an embedded finance venture aimed at its business clients.

SemFi is a joint venture between HSBC and B2B global trade network Tradeshift, designed to embed HSBC payment, trade and financing solutions across a variety of eCommerce and marketplace venues, including Tradeshift’s network, according to a Thursday (Oct. 3) press release.

“Businesses are increasingly looking for seamless financial solutions that are embedded within their e-commerce journeys, so they can access these when and where they need them,” Vinay Mendonca, CEO of the new venture, said in a news release.

“SemFi by HSBC aims to deliver such embedded capabilities to help businesses grow. It will seek to bring the best of both worlds to our business customers and e-commerce partners; a startup technology mindset coupled with the global scale and expertise of an international bank,” Mendoca said.

The new venture will roll out first in the U.K., letting small and medium-sized enterprise (SME) suppliers on eCommerce avenues access digital invoice financing from HSBC, as well as virtual card solutions.

SemFi is launching at a moment when embedded lending is growing in popularity around the globe, as PYMNTS wrote last week.

This type of financing “promises convenient, streamlined access to financing for specific expenses from within merchants, businesses and other platforms,” that report said. “This proves impactful for individuals and microbusinesses and small businesses (MSBs) that want to align their cash flow and expenses.”

Research by PYMNTS Intelligence commissioned by Visa shows that across six major world markets, 15% of individuals and 18% of MSBs have used this type of lending recently, with adoption levels varying by country. For example, 17% of consumers in the U.S. have used it, as of 37% of MSBs in India.

“However, users widely experience friction that detracts from their experience,” PYMNTS wrote. “The biggest problem area is the application process, with many consumers and MSBs that recently used this lending reporting issue. Lenders that address these issues will reach and retain many more customers.”

Meanwhile, PYMNTS spoke Thursday with Mathieu Altwegg, vice president, head of product and solutions for U.K. and Ireland at Visa.

As that report noted, embedded finance is proving to be crucial for smaller businesses, in the face of an uncertain macro environment marked by relatively high interest rates.

“Many times in life, when you expect it least, you need speed, and you need availability when it comes to credit — or access to cash flows and capital,” Altwegg told PYMNTS. “And all of it needs to be contextual.”